OPEN Insight: Building and Protecting Business Credit

8/14/2019 OPEN Insight: Building and Protecting Business Credit

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OPEN BOOK INSIGH —PlaN Or yOur BuSINESS GrOwH

Gien the tightening o edit in theeono, it’s oe iti thn ee o bsinessones to be igint bot nging theiedit. lendes onside iet o tos hen eting o bsiness edit, indingboth o peson nd bsiness pent nd

edit histo.It is dit to pedit hen o

bsiness i need to boo, so s bsinesses ok tod deonstting esponsibe editngeent ong beoe nds e needed.

Hee e soe steps o n tke tohep ense tht o edit poe pepes oo booing.

DEmONSraE GOOD DEB—maNaGEmEN SKIllSIn ode to bid edit histo o

need to se edit. look o n oppotnit toboo one t tie hen o bsinessn se the nds esponsib nd p thebk ik. Tese good booing hbits ndpoen biit to ep n hep poide soidondtion o te booing.

a ke pt o sess debtngeent is sing booed nds o theight ppose. Good esons to boo inde

oeing tepo sh o shotge ndnning goth. In these ses the nds oeping the debt shod be e identibend od e sti the isk o booing.less ide is tking on debt to dig ot o nni isis o to nd po. In these ses,ness o he nds eked to ep theon, tking on debt n be isk.

uSE HE rIGH INaNcIal—OOlS Or HE jOBmnging o edit is esie hen

o ndestnd the intended ppose o iosnning toos. use the ooing ist s gide

1. use hge ds hen o n p ofphses in b the end o theonth so o don’t he to p oess to the pit, e.g. inteest.

2. I o nt to hgeoe see onths, onside sing edit ehie tht ets o p of inteest bt keep eoing bne.

Building and Protecting

Business credit

Dana Flynn, Jasmine arkeshi Laughing Lotus Yoga Center, San Francisco, CA Members since 1985

www.openforum.com/insightguides




OvErvIEw: a BuSINESS crEDI rEPOr

like o peson edit histo, o opn’s edit ting is deteined b edit epotinggenies independent opnies tht ssess o edit “soe” bsed on tos sh s penthisto nd debt od.

Hee is ho bsiness edit tings dife o peson edit tings. yo bsiness soe is bsed pii on the tieiness o pents. unike peson edit, hing tipe tie onts n be positie, poided tht the

e in good stnding. It deonsttes tht o bsiness is s bot nging its nnes. Soe inotion in o bsiness poe be seepoted, hih is tpi not

oed on peson epots. yo do this b estbishing poe ith the edit be;onst thei ebsites o detis.

Bsiness editos e not eied to epot pents to the bes, so i o’e inteested inbiding good ting, sk endos i the e iing to epot o pent peone.

as is the se ith o peson edit, it is disbe to obtin o opn’s epot o theo epoting genies (see beo). Note tht thee be hge o this; detis e ibeon thei ebsites o b ing the diet.

3. a ine o edit n hep o soothsh o, ke seson phses onge shotte sh nhes.Be e, thogh, bot sing it o

ongte debt.

4. o oe ost phses sh spit eipent o e estte, tdition on, ith its xed pentshede, ight be ost ppopite.

5. use bsiness edit ds o sn phses s possibe.athogh o p ee o thed, the phses o n ke ith

ed points i ike ofset n sge osts.

uNDErSaND lENDErS’—GuIDElINES like o, endes nt to iniie

isk. Te oten se itei ed the “5 c’s” to

d&B™ (d B) .dnb.o

Inotion soes: Bsiness one nd endo inotion

Soing sste: PayDEX™ soe bsed on pent expeienesDuNS rting™ bsed on nni stteents

exp B™ .expein.o

Inotion soes: vendo inotion on

Soing sste: Inteisoe™ bsed on pent expeienes

x™ B .eix.o

Inotion soes: Pbi eods, Pent histoies, Option peson dt o bsinesspinip, Bnk nd ese dt

Soing sste: S Bsiness cedit risk Soe o Sppies, Bsiness ierisk Soe, risk css™




Paul CernutoHigh ech Landscapes, Branchburg, NJ Member since 1989

ssess opn’s editothiness. consideho o opn peos in these es tohep pt o in the best ight hen ppingo nning:

1. c wht is o opn’sedit histo? Ho ike e o to ep the on?

2. cpy Is o opn’s sh o sient to eet ent nd pospetieon o ese oitents?

3. c wht nonsh bsinessssets, sh s eipent, e estte ndinento, n be sed to see on?

4. cp wht’s o peson net oth,o the net oth o o bsiness?

5. c wht otside tos shs eonoi onditions, opetition ndthe ike fet epent?

mINImIzE BaD crEDI rISKS—Soping stoes n ipt

o biit to ess pit. Iesponsibe endos n he sii ipt. ke stepsto potet ose o the “ong” kind o


uNDErSaNDING yOur cOmPaNy’S crEDI rEPOr

wht shod o ook o hen eieing o opn’s bsiness edit epot? yo nt to hek hie gining insightinto ho the edit epoting geniespot o to potenti endes.reebe tht bsiness edit ses difeentpetes thn peson edit thesest to bid bsiness edit beto ke o pents on tie, keep oinotion p to dte, nd keep o debtnning don.

when o eie o edit epots,exine o:

cmpy pf chek detiso : bsiness ne nd ge,ddess, phone, indst, nbe o epoees nd inopotion stts.mh o this inotion is “seepoted,” ening the ons is on thebsiness one to ense tht the dtis oet nd p to dte.

c Note i o tingis stong, ege o poo. repotingopnies se difeent soingethods, so thei tings ight notbe the se. o expe, the D&BPayDEX soe nges o 1 to 100, ith highe soes inditing bettepent peone; Eix’s S

Bsiness cedit risk Soe opeteson se o 101992. I the epotdoes not poide ontext o the soe,onst the poides’ ebsites odetis on ho to intepet o nbes.




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bsiness ssoite b heking eeenes onpospetie ptnes, stoes nd endos.St on top o o stoes to enoge

on tie pents b sending noties hen eeibe is de o te. conside eptingedit ds, hih n both oe o exposeto te pents nd inese the tieiness o o eeipts. cedit d opnies n sot s inteediies shod dispte ise, ndpotenti ssist o ith dent hges.

— SEParaE BuSINESS aNDPErSONal crEDI

whie n bsiness ones ndthei peson nd opote nnes inked, it isipotnt to keep these s septe s possibe.aoid oinging bsiness nd pesonssets. Set p bsiness sings nd hekingonts. He dedited bsiness hge

d ont, s e s septe bsiness onsnd edit ines. Seption hs to obenets it heps o opn estbish edit histo, nd it n ede the ipt tht bsiness pobe n he on o pesonedit. Be e, hoee, tht n endes iose exine the peson edit histo o opn’s ones beoe ppoing nning.(See eted sidebs.)

uNDErSaNDING yOur cOmPaNy’S crEDI rEPOr - ont’d

Pym y con tht opent histo is te. Ping ithin the tes set b o sppies be the ost diet to die positie bsiness edit ting. look o tends tht endes ight g,ike hnge o ping in eh onth to king inipents. Ense tht sppieetionships e epesented. I

o’e been king tie pentsto sppie o ende, it shod beeeted in o poe. I it is not, o i need to ontt the endo toepot o pent histo ith the.

um cmm c (ucc)

f Tis shos the iens ndeses o he in pe. vie thisinotion o ende’s ee: Is

it te? cod o opn bepeeied s oeextended?

Steve Sulkin MBM Productions International, Chicago, IL

Member since 1988




M b q . sm mp vy

m p f mm. a f p, w

q y mpy’ f. t w pv y w vvw

w y y m y mpy’ , w y m b

m mpvm.

1. mONIOr my cOmPaNy’S crEDIIt is ipotnt to eie o opn’s edit poe eg o . a goodptie is to eest o edit epot o the thee o edit genies eh e.

HOw OEN DO yOu mONIOr yOur cOmPaNy’S crEDI ScOrE?

NeeOne teOne eOne ee to to e esIt’s been oe thn e es

2. aKE SOcK O my cOmPaNy’S crEDI NEEDSreie o ent site o edit toos to ke se the eet o needs no ndgoing od. conside o edit nd hge ds, ines o edit, bnk ons, tdeedit, eipent eses, oei otgges nd the ike.

wHa yPES O crEDI – aND HOw mucH – IS currENly avaIlaBlE O yOur cOmPaNy?

cedit vehie aont aibiit geted useBnk lon $10,000 Iedite Oe nite


Worksheet yOur cOmPaNy’S crEDI aSSESSmEN




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2. aKE SOcK O my cOmPaNy’S crEDI NEEDS (ont’d)

NOw cONSIDEr HE NEEDS Or OPPOruNIIES yOu DON’ HavEcOvErED IN HE aBOvE aND wHa NEw SOurcES yOu mIGHcONSIDEr — crEDI carDS, lINES O crEDI, EquIPmENlEaSES, Ec.

cedit vehie aont aibiit geted use

3. rEvIEw EXISING/POENIal rElaIONSHIPSke ook t o ent endo nd stoe etionships to see ho o ightipoe the. as o bid o edit histo, o need to estbish ne etionships tht n hep o tke dntge o te oppotnities.

In the et on, ke ist o o ent endos/sppies, stoes nd esingetionships nd indite hethe o not o ee the etionship is oking eient.

Poide’s ne stised nstised nse

stised nstised nse stised nstised nse

stised nstised nse stised nstised nse






3. rEvIEw EXISING/POENIal rElaIONSHIPS (ont’d)

arE yOu NEGOIaING HE BES PaymEN ErmS wIH yOur vENDOrS?Inteest tes on edit ds nd ons be negotibe, s be ge peiods opent. I the indst stndd is net60 nd o’e ping net30, sk o endo

o ne tes; nd ot bot e pent disonts too. I o’e not se bot ht pent tes to expet, sk othe bsiness ones bot thei tes o esehofeings oss tipe sppies.

vendo es renegotite?

DO yOu rEvIEw PrOSPEcIvE cuSOmErS’ crEDI BEOrEaccEPING HEm aS clIENS?Don’t et so pe dispt o sh o. use the ooing hekist to hep odeteine pent pn tht oks in o best inteest.

reie thei edit tings b eesting epots o the 3 o genies.ask o eeenescete edit hek o in hih o gthe eent inotion sh s nbe

o es in bsiness, tde eeenes, bsiness stte nd nbe o epoees.

am w w mp q, m ppm w yf p, , bp y f . t y wy mpv y w m y b. Y y f w m wb p wpp y mpy’ w .





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t m b p v, 1-800-noW-oPen v www.p.m

F m oPen B i, p y w y b, v www.pm.mCopyright© 2005-2008 American Express Company. All Rights Reserved. Te information contained in this document is meant for advisory purposes only.

American Express accepts no liability for any outcome of its use.

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OPEN Insight: Building and Protecting Business Credit

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